Ero Copper Corp.
(TSX: ERO, NYSE:
ERO) (“Ero” or the “Company”) is pleased to
announce its financial results for the three and nine months ended
September 30, 2021. Management will host a conference call
tomorrow, Thursday, November 11, 2021, at 12:30 p.m. Eastern time
to discuss the results. Dial-in details for the call can be found
near the end of this press release.
HIGHLIGHTS
- Copper production of 10,057 tonnes
at the MCSA Mining Complex at C1 cash costs(*) of $0.94 per pound
of copper produced during the quarter;
- Gold production of 9,426 ounces at
the NX Gold Mine at C1 cash costs(*) of $538 per ounce of gold
produced and All-in Sustaining Costs ("AISC")(*) of $741 per ounce
of gold produced;
- Strong quarterly adjusted EBITDA(*)
of $72.9 million and adjusted net income attributable to owners of
the Company(*) of $45.7 million ($0.49 per share on a diluted
basis);
- Record quarterly cash flows from
operations of $150.7 million driven by strong operating performance
and a $100.0 million upfront payment related to the August 2021
closing of the $110 million streaming agreement with Royal Gold (as
defined below) in relation to gold production from the NX Gold Mine
(the "NX Gold Stream");
- Announced results of optimized
Feasibility Study for the Boa Esperança Project, doubling life-
of-mine copper production compared to the 2017 Study (as defined
below);
- Repaid $100.0 million of principal
on the $150.0 million senior secured revolving credit facility,
resulting in available liquidity at quarter-end of $219.1 million,
including $92.6 million of cash and cash equivalents, $26.4 million
in short-term investments, and $100.0 million of undrawn
availability under the senior secured revolving credit facility;
and,
- Tracking towards the high-end of
the Company's reaffirmed 2021 production guidance ranges; lowering
full-year AISC guidance for the NX Gold Mine to $650 to $725 per
ounce of gold produced and updating 2021 capital expenditure
guidance for the MCSA Mining Complex to reflect the acceleration of
capital expenditures associated with key projects into Q4 2021 as
well as the impact of inflationary pressures on capitalized
development.
Commenting on the results, David Strang, CEO,
stated, “The third quarter was instrumental in positioning our
Company to execute on our growth strategy. We delivered on three
important milestones during the quarter including the completion of
an optimized Feasibility Study on the Boa Esperança Project, the
closing of the previously announced $110 million NX Gold Stream,
and the conclusion of mill maintenance at the MCSA Mining Complex
in preparation for expanded operations. With the construction of
the new external shaft at the Pilar Mine initiated on schedule in
September and the planned commencement of early construction
activities at the Boa Esperança Project expected to begin in Q2
2022 (subject to approval by the Company's Board of Directors), our
team is working to double production while maintaining strong
margins over the coming years.
"In preparation of these growth timelines, we
have brought forward the second phase of our cooling project and
made down payments for long-lead items related to the new external
shaft for the Pilar Mine. While we, like the rest of the mining
industry, are seeing global inflationary pressures impacting both
operating and capital development costs, it remains to be seen
whether this cost pressure is transitory or structural in nature.
As a result of the acceleration of growth project capital and
incorporating increases in development costs, we are updating our
capital expenditure guidance for the full-year at the MCSA Mining
Complex by approximately $20 million.
"With respect to the Deepening Extension
Project, construction of the first phase of the shaft and other
early civil works have commenced. Concurrently, we are finalizing
the optimization efforts on the project including plans to increase
the shaft's diameter. As a result of incorporating exceptional
year-to- date drill results from the Deepening Extension and new
drilling in the upper levels of the mine, our team has begun
working on a longer-term initiative to potentially increased
overall production volumes from the Pilar Mine.
"We have an exceptional asset portfolio and our
team has worked hard to achieve peer-leading cost performance
through optimization and innovation, principles that we are
applying to the Deepening Extension and Boa Esperança Projects.
While we expect the macro operating environment to remain dynamic,
we are staking our success on the core values that have
consistently delivered shareholder value: executing upon
high-return and low-capital intensity projects.”
*Earnings before interest, taxes, depreciation
and amortization (“EBITDA”), Adjusted EBITDA, Adjusted net income
attributable to owners of the Company, Adjusted net income per
share attributable to owners of the Company, C1 cash cost per pound
of copper produced, C1 cash cost per ounce of gold produced and
All-in Sustaining Costs (“AISC”) per ounce of gold produced are
non-IFRS measures – see the Notes section of this press release for
additional information. C1 cash cost per pound of copper produced
are net of by-product credits from metal produced at the MCSA
Mining Complex. AISC per ounce of gold produced are net of
by-product credits from metal produced at the NX Gold Mine.
OPERATIONS &
EXPLORATION HIGHLIGHTS
- Mining
& Milling Operations – on
track to achieve high-end of full-year production guidance
- The MCSA Mining
Complex processed 572,666 tonnes of ore grading 1.90% copper,
producing 10,057 tonnes of copper in concentrate during the quarter
after metallurgical recoveries of 92.4%; YTD 2021 copper production
totaled 33,593 tonnes based on approximately 1.7 million tonnes
processed at copper grades of 2.11% and metallurgical recoveries of
92.3%.
- The second and
final phase of scheduled mill maintenance at the MCSA Mining
Complex was completed at the end of Q3 2021, positioning the
Company for higher mill throughput in Q4 2021.
- The NX Gold Mine
processed 42,874 tonnes grading 7.37 grams per tonne, producing
9,426 ounces of gold after metallurgical recoveries of 92.7% and
6,575 ounces of silver produced as by-product; YTD 2021 tonnes
processed totaled 124,422 at an average grade of 7.67 grams per
tonne, producing 29,254 ounces of gold after metallurgical
recoveries of 95.4% and 19,172 ounces of silver produced as
by-product.
- Construction of
the NX Gold Mine's paste-fill plant concluded in Q3 2021, and
commissioning is currently underway. Integration into the
operations is anticipated before year-end with implementation
expected to improve overhand cut and fill mining operations and
enhance pillar recovery throughout the mine.
-
Exploration Activities – strong exploration
results expected to drive positive year-end mineral reserve and
resource update
- Q3 2021
exploration activities continued to generate exceptional results
both in-mine and near-mine at the MCSA Mining Complex and the NX
Gold Mine, positioning the Company for a positive year-end mineral
reserve and resource update.
- Ongoing
exploration efforts are focused on aggressively advancing target
zones and new mineral systems within each of the Company's core
exploration programs in an effort to meaningfully augment near- to
long-term production at both the MCSA Mining Complex and the NX
Gold Mine.
- Please refer to
the Company's press release dated October 14, 2021 for the latest
results from the Company's ongoing exploration programs.
-
Organic Growth
Projects
- Site clearing,
early civil works and initial construction for the new external
shaft supporting the Deepening Extension Project commenced in
September 2021. Concurrent engineering and design efforts are
focused on optimizing the 2020 shaft design and evaluating the
potential for increased production volumes from the Pilar Mine
longer-term.
- On September 28,
2021, the Company announced results for the optimized Feasibility
Study on its Boa Esperança Project. Early construction works are
expected to commence in Q2 2022, subject to approval by the
Company's Board of Directors. Select highlights include:
- 41.8% after-tax
internal rate of return and $380 million after-tax net present
value (8%) based on Consensus Copper Prices(1) and a 5.00 BRL:USD
exchange rate;
- Doubled
life-of-mine ("LOM") copper production to approximately 326,000
tonnes from 163,000 tonnes in the 2017 Study(2) with increased mine
life of twelve years;
- Average LOM
copper production increased to over 27,000 tonnes per annum, with
the first five years of production averaging approximately 35,000
tonnes per annum; and
- Low
capital-intensity of approximately $8,400 per tonne of average
annual copper production for the first 5 years of the Project,
resulting in rapid payback of 1.4 years at Consensus Copper
Prices.
-
Corporate Highlights
- In August 2021,
the Company closed the $110 million NX Gold Stream, unlocking
significant value from the NX Gold Mine and highlighting the
exploration potential of the broader NX Gold land package.
Additional detail is provided later in this press release.
- The Company used
cash on hand, bolstered by $100.0 million in upfront cash
consideration received upon the closing of the NX Gold Stream, to
repay $100.0 million of principal on its $150.0 million senior
secured revolving credit facility. At September 30, 2021, the
Company had $50.0 million drawn under its $150.0 million senior
secured revolving credit facility.
(1) Consensus Copper Prices based on the average
analyst copper price estimates from 26 financial institutions as of
August 31, 2021, or the effective date of the mineral resource and
mineral reserve estimates for the Boa Esperança Project as
disclosed in the press release dated September 28, 2021, resulting
in $3.80 per pound in 2024, $3.95 per pound in 2025 and $3.40 per
pound in 2026 and thereafter. Using Consensus Copper Prices, the
average LOM copper price is $3.51 per pound. Using a flat $3.50 per
pound copper price over the LOM, the Boa Esperança Project
generates a 38.0% after-tax internal rate of return and a $361
million after-tax net present value (8%), assuming a 5.00 BRL:USD
exchange rate.(2) The "2017 Study" is defined as the technical
report entitled "Feasibility Study Technical Report for the Boa
Esperança Copper Project, Pará State, Brazil”, dated September 7,
2017 with an effective date of June 1, 2017, prepared by Rubens
Mendonça, MAusIMM of SRK Consultores do Brasil Ltda. (“SRK”) as at
the date of the report and Carlos Barbosa, MAIG and Girogio di
Tomi, MAusIMM, both of SRK Brazil, and each a “qualified person”
and “independent” of the Company within the meanings of National
Instrument 43-101, Standards of Disclosure for Mineral Projects
("NI 43-101").
OPERATING AND
FINANCIAL HIGHLIGHTS
|
|
3 months
endedSep. 30,
2021 |
|
|
|
3 months
endedJune 30,
2021 |
|
|
9 months
endedSep. 30,
2021 |
|
|
|
3 months
endedSep. 30,
2020 |
|
|
|
9 months
endedSep. 30,
2020 |
|
Operating Highlights |
|
Copper (MCSA
Operations) |
|
|
|
|
|
Ore Processed (tonnes) |
|
572,666 |
|
|
|
553,992 |
|
|
1,724,252 |
|
|
|
553,148 |
|
|
|
1,788,178 |
|
Grade (% Cu) |
|
1.90 |
|
|
|
2.13 |
|
|
2.11 |
|
|
|
2.18 |
|
|
|
2.03 |
|
Cu Production (tonnes) |
|
10,057 |
|
|
|
10,898 |
|
|
33,593 |
|
|
|
10,961 |
|
|
|
32,796 |
|
Cu Production (000 lbs) |
|
22,170 |
|
|
|
24,026 |
|
|
74,059 |
|
|
|
24,164 |
|
|
|
72,302 |
|
Cu Sold in Concentrate (tonnes) |
|
10,762 |
|
|
|
10,093 |
|
|
33,324 |
|
|
|
11,530 |
|
|
|
32,549 |
|
Cu Sold in Concentrate (000 lbs) |
|
23,727 |
|
|
|
22,253 |
|
|
73,468 |
|
|
|
25,420 |
|
|
|
25,420 |
|
C1 cash cost of Cu produced (per lb)(1) |
$ |
0.94 |
|
|
$ |
0.72 |
|
$ |
0.70 |
|
|
$ |
0.63 |
|
|
$ |
0.66 |
|
Gold (NX Gold
Operations) |
|
|
|
|
|
Au Production (oz) |
|
9,426 |
|
|
|
10,377 |
|
|
29,254 |
|
|
|
9,436 |
|
|
|
26,041 |
|
C1 cash cost of Au Produced (per oz)(1) |
$ |
538 |
|
|
$ |
499 |
|
$ |
508 |
|
|
$ |
421 |
|
|
$ |
478 |
|
AISC of Au produced (per oz)(1) |
$ |
741 |
|
|
$ |
660 |
|
$ |
681 |
|
|
$ |
579 |
|
|
$ |
636 |
|
Financial Highlights |
|
|
|
|
|
($ in millions,
except per share
amounts) |
|
|
|
|
|
Revenues |
$ |
111.8 |
|
|
$ |
120.7 |
|
$ |
355.0 |
|
|
$ |
94.3 |
|
|
$ |
232.8 |
|
Gross profit |
|
68.0 |
|
|
|
83.7 |
|
|
234.5 |
|
|
|
59.6 |
|
|
|
129.8 |
|
EBITDA(1) |
|
48.5 |
|
|
|
112.0 |
|
|
215.7 |
|
|
|
52.1 |
|
|
|
24.9 |
|
Adjusted EBITDA(1) |
|
72.9 |
|
|
|
85.5 |
|
|
245.1 |
|
|
|
62.5 |
|
|
|
138.4 |
|
Cash flow from operations |
|
150.7 |
|
|
|
85.1 |
|
|
297.9 |
|
|
|
44.4 |
|
|
|
124.2 |
|
Net income (loss) |
|
26.4 |
|
|
|
84.0 |
|
|
142.4 |
|
|
|
31.4 |
|
|
|
(13.8 |
) |
Net income (loss) attributable to owners of the |
|
|
|
|
|
Company |
|
26.1 |
|
|
|
83.4 |
|
|
141.2 |
|
|
|
31.1 |
|
|
|
(14.2 |
) |
Per share (basic) |
|
0.29 |
|
|
|
0.95 |
|
|
1.60 |
|
|
|
0.36 |
|
|
|
(0.16 |
) |
Per share (diluted) |
|
0.28 |
|
|
|
0.89 |
|
|
1.52 |
|
|
|
0.34 |
|
|
|
(0.16 |
) |
Adjusted net income attributable to owners of the Company(1) |
|
45.7 |
|
|
|
53.7 |
|
|
155.7 |
|
|
|
36.7 |
|
|
|
77.8 |
|
Per share (basic) |
|
0.52 |
|
|
|
0.61 |
|
|
1.76 |
|
|
|
0.42 |
|
|
|
0.90 |
|
Per share (diluted) |
|
0.49 |
|
|
|
0.58 |
|
|
1.67 |
|
|
|
0.40 |
|
|
|
0.85 |
|
Cash, cash equivalents, and short-term investments |
|
119.1 |
|
|
|
137.7 |
|
|
119.1 |
|
|
|
54.3 |
|
|
|
54.3 |
|
Working capital (deficit)(1) |
|
81.4 |
|
|
|
118.9 |
|
|
81.4 |
|
|
|
(9.4 |
) |
|
|
(9.4 |
) |
Net debt(1) |
|
(63.7 |
) |
|
|
19.2 |
|
|
(63.7 |
) |
|
|
118.4 |
|
|
|
118.4 |
|
(1) EBITDA, Adjusted EBITDA, Adjusted net income
(loss) attributable to owners of the Company, Adjusted net income
(loss) per share attributable to owners of the Company, Net Debt,
Working Capital, C1 cash cost of copper produced (per lb), C1 cash
cost of gold produced (per ounce) and AISC of gold produced (per
ounce) are non-IFRS measures – see the Notes section of this press
release for a discussion on non-IFRS Measures.
ADJUSTED EBITDA & NET INCOME (LOSS)
RECONCILIATION |
|
($ in thousands) |
|
3 months
endedSep. 30,
2021 |
|
|
|
Adjusted EBITDA |
$ |
72,860 |
|
Adjustments: |
|
|
Unrealized foreign exchange loss on USD denominated balances in
MCSA |
|
(5,883 |
) |
Unrealized foreign exchange loss on derivative contracts |
|
(12,350 |
) |
Realized foreign exchange loss on derivative contracts |
|
(4,381 |
) |
Share based compensation and other |
|
931 |
|
NX Gold stream transaction fees |
|
(1,219 |
) |
Incremental costs in response to COVID-19 pandemic |
|
(1,485 |
) |
EBITDA |
$ |
48,473 |
|
|
|
|
Adjusted net
income attributable
to owners of
the Company |
$ |
45,708 |
|
Adjustments for non-cash items (attributable to owners of the
Company): |
|
|
Unrealized foreign exchange loss on USD denominated debt in
MCSA |
|
(4,618 |
) |
Unrealized foreign exchange loss on derivative contracts, net of
tax |
|
(10,417 |
) |
Unrealized gain on interest rate derivative |
|
147 |
|
Share based compensation |
|
(2,041 |
) |
NX Gold stream transaction fees |
|
(1,219 |
) |
Incremental costs in response to COVID-19 pandemic |
|
(1,479 |
) |
Reported net
income attributable
to owners of
the Company |
$ |
26,081 |
|
NX GOLD STREAM
During the quarter, the Company closed the NX
Gold Stream with RGLD Gold AG, a wholly owned subsidiary of Royal
Gold Inc. (collectively, “Royal Gold”), and received an upfront
cash payment of $100 million for the purchase of 25% of gold
produced until 93,000 ounces of gold have been delivered,
decreasing to 10% of gold produced over the remaining life of mine.
Royal Gold will make ongoing payments equal to 20% of the
prevailing spot gold price for each ounce of gold delivered until
49,000 ounces of gold have been received, after which it will pay
40% of the prevailing spot gold price for each ounce of gold
delivered. Additional payment obligations of Royal Gold
include:
- Up to US$5
million payable, available through the end of 2024, based upon the
number of ounces of gold added to the Measured and Indicated
mineral resource categories as compared to the mineral resources as
of the effective date of the NX Gold Stream at a rate of US$20 per
ounce;
- Up to US$5
million payable, available from 2022 through the end of 2024, based
upon completion of planned meters of drilling within the
exploration concessions of the NX Gold Mine at a rate of US$100 per
meter; and,
- US$5 per ounce
of gold delivered under the NX Gold Stream payable to the Company
as contribution towards ongoing ESG initiatives within the area of
influence of the mine.
Please refer to the Company’s press releases
dated June 30, 2021 and August 6, 2021 for additional information
on the NX Gold Stream.
2021 PRODUCTION
OUTLOOK(*)
The Company is well-positioned to achieve the high-end of its
reaffirmed 2021 production guidance ranges of:
- 42,000 to 45,000
tonnes of copper in concentrate at the MCSA Mining Complex
- 34,500 to 37,500
ounces of gold at the NX Gold Mine
During Q3 2021, the Company completed the second
and final phase of preventative mill maintenance at the MCSA Mining
Complex in preparation for expanded operations and higher mill
throughput volumes, including from Surubim open pit mine where
pre-stripping activity continued during the quarter. Initial
production from the Surubim open pit, including the processing of
ore stockpiled during pre-stripping, is expected to drive higher
mill throughput volumes and lower average processed copper grades
during Q4 2021.
The Company expects to achieve the high-end of
its full-year production guidance at the NX Gold Mine despite lower
planned grades in Q4 2021 due to mine sequencing within the Santo
Antonio Vein.
2021 COST
GUIDANCE(*)
The Company is on track to achieve its
reaffirmed 2021 C1 cash cost guidance ranges, which assume a
USD:BRL foreign exchange rate of 5.00, a gold price of $1,750 per
ounce and a silver price of $20.00 per ounce. The Company has
lowered its 2021 AISC guidance range for the NX Gold Mine to
reflect lower sustaining capital expenditures year-to-date.
|
2021 Guidance |
MCSA Mining Complex C1 Cash Cost Guidance (US$/lb)(1) |
$0.75 -
$0.85 |
NX Gold Mine C1 Cash Cost Guidance (US$/oz)(1) |
$500 -
$600 |
NX Gold Mine All-in Sustaining Cost (AISC) Guidance
(US$/oz)(1) |
$650 -
$725 |
(1) C1 Cash Costs and AISC are a non-IFRS measure - see the
Notes section of this press release for additional information.
2021 CAPITAL
EXPENDITURE
GUIDANCE(*)
The Company is reaffirming its full-year capital
expenditure guidance for the NX Gold Mine and updating its 2021
capital expenditure guidance for MCSA Mining Complex to reflect the
acceleration of: (i) the Phase 2 cooling project at the MCSA Mining
Complex, (ii) long-lead item purchases related to the new external
shaft of the Pilar Mine and (iii) early civil and road construction
activities at the Boa Esperança project into Q4 2021. Capitalized
development costs at the MCSA Mining Complex have also been updated
to reflect inflationary pressures impacting consumables used in
development activities. The capital expenditure guidance assumes a
USD:BRL foreign exchange rate of 5.00 and has been presented below
in USD millions.
MCSA Operations |
2021 Guidance |
Pilar Mine and Caraíba Mill Complex (excluding Deepening Extension
Project) |
$55.0 - $60.0 |
Deepening Extension Project |
26.0 - 28.5 |
Vermelhos Mine & District |
8.0 - 10.0 |
Surubim Open Pit Mine |
6.0 - 8.0 |
Boa Esperanҫa Project |
7.0 - 9.0 |
Capital Expenditure
Guidance |
$102.0 -
$115.5 |
Curaçá Valley
Exploration |
$30.0 -
$35.0 |
NX Gold
Mine |
2021 Guidance |
Capital Expenditure Guidance |
$13.0 - $15.0 |
Exploration |
8.0- 10.0 |
Total, NX Gold
Mine |
$21.0 -
$25.0 |
(*) Guidance is based on certain estimates and
assumptions, including but not limited to, mineral reserve
estimates, grade and continuity of interpreted geological
formations and metallurgical performance. Please refer to the
Company’s SEDAR filings, including the Annual Information Form for
the year ended December 31, 2020 and dated March 16, 2021 (the
“AIF”), for complete risk factors.
CONFERENCE CALL
DETAILS
The Company will hold a conference call on Thursday, November
11, 2021 at 12:30 pm Eastern time (8:30 am Pacific time) to discuss
these results.
Date: |
Thursday, November 11, 2021 |
Time: |
12:30 pm Eastern time (9:30 am Pacific time) |
Dial in: |
North America: 1-800-319-4610, International:
+1-604-638-5340 |
|
please dial in 5-10 minutes prior and ask to join the call |
|
|
Replay |
North America: 1-800-319-6413, International:
+1-604-638-9010 |
Replay Passcode: |
7736 |
NOTES
Non-IFRS measures
Financial results of
the Company are prepared in accordance with IFRS. The Company
utilizes certain non-IFRS measures, including C1 cash cost of
copper produced (per lb), C1 cash cost of gold produced (per
ounce), AISC of gold produced (per ounce), realized gold price,
EBITDA, Adjusted EBITDA, Adjusted net income attributable to owners
of the Company, Adjusted net income per share, net debt, working
capital and available liquidity, which are not measures recognized
under IFRS. The Company believes that these measures, together with
measures determined in accordance with IFRS, provide investors with
an improved ability to evaluate the underlying performance of the
Company. Non-IFRS measures do not have any standardized meaning
prescribed under IFRS, and therefore they may not be comparable to
similar measures employed by other companies. The data is intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
C1 cash cost
of copper
produced (per
lb.)
C1 cash cost of
copper produced (per lb) is the sum of production costs, net of
capital expenditure development costs and by-product credits,
divided by the copper pounds produced. C1 cash cost reported by the
Company include treatment, refining charges, offsite costs, and
certain tax credits relating to sales invoiced to the Company’s
Brazilian customer on sales. By- product credits are calculated
based on actual precious metal sales (net of treatment costs)
during the period divided by the total pounds of copper produced
during the period. C1 cash cost of copper produced per pound is a
non-IFRS measure used by the Company to manage and evaluate
operating performance of the Company’s operating mining unit and is
widely reported in the mining industry as benchmarks for
performance but does not have a standardized meaning and is
disclosed in addition to IFRS measures.
C1 cash cost
of gold produced
(per ounce)
C1 cash cost of gold
produced (per ounce) is the sum of production costs, net of capital
expenditure development costs and silver by-product credits,
divided by the gold ounces produced. By-product credits are
calculated based on actual precious metal sales during the period
divided by the total ounces of gold produced during the period. C1
cash cost of gold produced per ounce is a non-IFRS measure used by
the Company to manage and evaluate operating performance of the
Company’s operating mining unit and is widely reported in the
mining industry as benchmarks for performance but does not have a
standardized meaning and is disclosed in addition to IFRS
measures.
All-in Sustaining
Cost of gold
produced (per
ounce)
All-in sustaining
cost of gold produced (per ounce) is the sum of production costs,
site general and administrative costs, accretion of mine closure
and rehabilitation provision, sustaining capital expenditures,
sustaining leases, and royalties and production taxes, net of
silver by- product credits, divided by the gold ounces produced.
By-product credits are calculated based on actual precious metal
sales during the period divided by the total ounces of gold
produced during the period. All-in sustaining cost of gold produced
per ounce is a non-IFRS measure used by the Company to manage and
evaluate operating performance of the Company’s operating mining
unit and is widely reported in the mining industry as benchmarks
for performance but does not have a standardized meaning and is
disclosed in addition to IFRS measures.
Earnings before
interest, taxes,
depreciation and
amortization (EBITDA)
and Adjusted
EBITDA
EBITDA represents
earnings before interest expense, income taxes, depreciation, and
amortization. Adjusted EBITDA includes further adjustments for
non-recurring items and/or items not indicative to the future
operating performance of the Company. The Company believes EBITDA
and adjusted EBITDA are appropriate supplemental measures of debt
service capacity and performance of its operations.
Adjusted EBITDA is calculated by
removing the following income statement items:
- Foreign exchange
loss (gain)
- Share based
compensation
- NX Gold stream
transaction fees
- Incremental costs
in response to COVID-19 pandemic
Adjusted net
income attributable
to owners of
the Company and
Adjusted net
income per share
attributable to owners of
the Company
The Company uses the
financial measure “Adjusted net income attributable to owners of
the Company” and “Adjusted net income per share attributable to
owners of the Company” (“Adjusted EPS”) to supplement information
in its condensed consolidated interim financial statements. The
Company believes that, in addition to conventional measures
prepared in accordance with IFRS, the Company and certain investor
and analysts use this information to evaluate the Company’s
performance. The Company excludes the following items from net
income to provide a measure which allows the Company and investors
to evaluate the operating results of the underlying core
operations:
- Share based
compensation
- Unrealized foreign
exchange loss (gain) on USD denominated balances in MCSA
- Unrealized loss
(gain) on foreign exchange derivative contracts, net of tax
- NX Gold stream
transaction fees
- Incremental costs in
response to COVID-19 pandemic
- Unrealized loss
(gain) on interest rate derivative contracts
Net Debt
Net debt is
determined based on cash and cash equivalents, short-term
investments, restricted cash and loans and borrowings as reported
in the Company’s condensed consolidated interim financial
statements. The Company uses net debt as a measure of the Company’s
ability to pay down its debt.
Working capital
and Available
liquidity
Working capital is
determined based on current assets and current liabilities as
reported in the Company’s condensed consolidated interim financial
statements. The Company uses working capital as a measure of the
Company’s short-term financial health and operating efficiency.
Available liquidity includes the Company’s cash and cash
equivalents, short-term investments and undrawn revolving credit
facilities in place.
ABOUT ERO
COPPER CORP
Ero Copper Corp, headquartered in Vancouver,
B.C., is focused on copper production growth from the MCSA Mining
Complex located in Bahia State, Brazil, with over 40 years of
operating history in the region. The Company's primary asset is a
99.6% interest in the Brazilian copper mining company, MCSA, 100%
owner of the MCSA Mining Complex, which is comprised of operations
located in the Curaçá Valley, Bahia State, Brazil, wherein the
Company currently mines copper ore from the Pilar and Vermelhos
underground mines, and the Boa Esperança development project, an
IOCG-type copper project located in Pará, Brazil. The Company also
owns 97.6% of the NX Gold Mine, an operating gold and silver mine
located in Mato Grosso, Brazil. Additional information on the
Company and its operations, including technical reports on the MCSA
Mining Complex, Boa Esperança and NX Gold properties, can be found
on the Company's website (www.erocopper.com), on SEDAR
(www.sedar.com), and on EDGAR (www.sec.gov).
ERO COPPER
CORP.
/s/ David Strang David Strang, CEO
For further information contact:Courtney Lynn, VP,
Corporate Development & Investor Relations (604)
335-7504info@erocopper.com
CAUTION REGARDING FORWARD LOOKING
INFORMATION AND STATEMENTS
This press release contains “forward-looking
statements” within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and “forward-looking
information” within the meaning of applicable Canadian securities
legislation (collectively, “forward-looking statements”).
Forward-looking statements include statements that use
forward-looking terminology such as “may”, “could”, “would”,
“will”, “should”, “intend”, “target”, “plan”, “expect”, “budget”,
“estimate”, “forecast”, “schedule”, “anticipate”, “believe”,
“continue”, “potential”, “view” or the negative or grammatical
variation thereof or other variations thereof or comparable
terminology. Such forward-looking statements include, without
limitation, statements with respect to mineral reserve and mineral
resource estimates as well as LOM plans; the Company’s
expectations, strategies and plans for the MCSA Mining Complex, the
NX Gold Property and the Boa Esperança Property, including, but not
limited to, the Company’s planned exploration, development and
production activities; estimated commencement or completion dates
for certain milestones; successfully adding or upgrading mineral
reserves and resources; the costs and/or timing of future
exploration and development including but not limited to the
Deepening Extension Project at the MCSA Mining Complex and the Boa
Esperança Project; the significance of any potential optimization
initiatives in connection with the Deepening Extension or Boa
Esperança Projects; the Company's outlook with respect to
production, cash costs, capital resources, expenditures, and
current global macroeconomic conditions; and the Company's ability
to achieve production, cost and capital expenditure guidance.
Forward-looking statements are not a guarantee
of future performance and are based upon a number of estimates and
assumptions of management in light of management’s experience and
perception of trends, current conditions and expected developments,
as well as other factors that management believes to be relevant
and reasonable in the circumstances, as of the date of this press
release including, without limitation, assumptions about: continued
effectiveness of the measures taken by the Company to mitigate the
possible impact of COVID-19 on its workforce and operations;
favourable equity and debt capital markets; the ability to raise
any necessary additional capital on reasonable terms to advance the
production, development and exploration of the Company’s properties
and assets; future prices of copper and other metal prices; the
timing and results of exploration and drilling programs; the
accuracy of any mineral reserve and mineral resource estimates; the
geology of the MCSA Mining Complex, NX Gold Property and the Boa
Esperança Property being as described in the technical reports for
these properties; production costs; the accuracy of budgeted
exploration and development costs and expenditures; the price of
other commodities such as fuel; future currency exchange rates and
interest rates; operating conditions being favourable such that the
Company is able to operate in a safe, efficient and effective
manner; work force conditions to remain healthy in the face of
prevailing epidemics, pandemics or other health risks (including
COVID-19), political and regulatory stability; the receipt of
governmental, regulatory and third party approvals, licenses and
permits on favourable terms; obtaining required renewals for
existing approvals, licenses and permits on favourable terms;
requirements under applicable laws; sustained labour stability;
stability in financial and capital goods markets; availability of
equipment and critical supplies, spare parts and consumables;
positive relations with local groups and the Company’s ability to
meet its obligations under its agreements with such groups; and
satisfying the terms and conditions of the Company’s current loan
arrangements. While the Company considers these assumptions to be
reasonable, the assumptions are inherently subject to significant
business, social, economic, political, regulatory, competitive,
global health, and other risks and uncertainties, contingencies and
other factors that could cause actual actions, events, conditions,
results, performance or achievements to be materially different
from those projected in the forward-looking statements. Many
assumptions are based on factors and events that are not within the
control of the Company and there is no assurance they will prove to
be correct.
Furthermore, such forward-looking statements
involve a variety of known and unknown risks, uncertainties and
other factors which may cause the actual plans, intentions,
activities, results, performance or achievements of the Company to
be materially different from any future plans, intentions,
activities, results, performance or achievements expressed or
implied by such forward-looking statements. Such risks include,
without limitation the risk factors listed under the heading “Risk
Factors” in the AIF.
Although the Company has attempted to identify
important factors that could cause actual actions, events,
conditions, results, performance or achievements to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events, conditions,
results, performance or achievements to differ from those
anticipated, estimated or intended.
The Company cautions that the foregoing lists of
important assumptions and factors are not exhaustive. Other events
or circumstances could cause actual results to differ materially
from those estimated or projected and expressed in, or implied by,
the forward-looking statements contained herein. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements.
Forward-looking statements contained herein are
made as of the date of this press release and the Company disclaims
any obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or results or
otherwise, except as and to the extent required by applicable
securities laws.
CAUTIONARY NOTES REGARDING MINERAL
RESOURCE AND MINERAL RESERVE ESTIMATES
In accordance with applicable Canadian
securities regulatory requirements, all mineral reserve and mineral
resource estimates of the Company disclosed in this press release
have been prepared in accordance with NI 43-101 and are classified
in accordance with the Canadian Institute of Mining, Metallurgy and
Petroleum (“CIM”) Definition Standards for Mineral Resources and
Mineral Reserves, adopted by the CIM Council on May 10, 2014 (the
“CIM Standards”). NI 43-101 is a rule developed by the Canadian
Securities Administrators that establishes standards for all public
disclosure an issuer makes of scientific and technical information
concerning mineral projects. NI 43-101 differs significantly from
the disclosure requirements of the Securities and Exchange
Commission (the “SEC”) generally applicable to U.S. companies. For
example, the terms “mineral reserve”, “proven mineral reserve”,
“probable mineral reserve”, “mineral resource”, “measured mineral
resource”, “indicated mineral resource” and “inferred mineral
resource” are defined in NI 43-101. These definitions differ from
the definitions in the disclosure requirements promulgated by the
SEC. Accordingly, information contained in this press release may
not be comparable to similar information made public by U.S.
companies reporting pursuant to SEC disclosure requirements.
Mineral resources which are not mineral reserves
do not have demonstrated economic viability. Pursuant to the CIM
Standards, mineral resources have a higher degree of uncertainty
than mineral reserves as to their existence as well as their
economic and legal feasibility. Inferred mineral resources, when
compared with measured or indicated mineral resources, have the
least certainty as to their existence, and it cannot be assumed
that all or any part of an inferred mineral resource will be
upgraded to an indicated or measured mineral resource as a result
of continued exploration. Pursuant to NI 43-101, inferred mineral
resources may not form the basis of any economic analysis.
Accordingly, readers are cautioned not to assume that all or any
part of a mineral resource exists, will ever be converted into a
mineral reserve, or is or will ever be economically or legally
mineable or recovered.
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